Rajini

ULIPS AS AN INVESTMENT OPTION
CHAPTER 1 INDUSTRY PROFILE Meaning Of Insurance:

Insurance is a form of risk-management which spreads risk of many people in exchange for Small payments from each. Specifically, insurance transfers some type of risk (accident, theft, natural disaster, illness, etc) from one person or group to a more financially-sound entity in exchange for a payment (also known as a premium). Premiums are often annual or monthly, but depending on the type of insurance they can be at other intervals. India insurance is a booming industry, with several national and international players Competing to excel. With several reforms and policy regulations, the Indian insurance sector has witnessed tremendous growth in the recent past.
Historical Perspective
Insurance in India has its history dating back till 1818 started by Anita Bhavsar, when Oriental Life Insurance Company was started by Europeans in Kolkata to cater to the needs of European community. Pre-independent era in India saw discrimination among the life of foreigners and Indians with higher premiums being charged for the latter. It was only in the year 1870, Bombay Mutual Life Assurance Society, the first Indian insurance company covered Indian lives at normal rates. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 In Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies. Insurance regulation formally began in India with the passing of the Life Insurance
NEW HORIZON COLLEGE OF ENGINEERING
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ULIPS AS AN INVESTMENT OPTION Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's violated insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development. The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted To organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company.
Indian Insurance: Sector Reform

Formation of the Malhotra Committee in 1993 initiated reforms in the Indian insurance sector. The aim of the Malhotra Committee was to assess the functionality of the Indian insurance sector. This committee was also in charge of recommending the future path of insurance in India. The Malhotra Committee attempted to improve various aspects of the insurance sector,
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ULIPS AS AN INVESTMENT OPTION making them more appropriate and effective for the Indian market. The recommendations of the committee put stress on offering operational autonomy to the insurance service providers and also suggested forming an independent regulatory body. The Insurance Regulatory and Development Authority Act of 1999 brought about several crucial policy changes in the insurance sector of India. It led to the formation of the Insurance Regulatory and Development Authority (IRDA) in 2000. The goals of the IRDA are to safeguard the interests of insurance policyholders, as well as to initiate different policy measures to help sustain growth in the Indian insurance sector.
Current scenario of India Insurance Industry

India is the fifth largest life insurance market in the emerging insurance economies globally. The market size of Indian insurance sector went up to US $47.89 billion in 2007, From US $21.71 billion in 2000, increasing at the rate of 120 percent. Between 2000 and 2007, overall premiums sustained an average growth rate of 11.96 per cent. This was one of most steady growth pattern witnessed amongst emerging economies in Asian as well as global markets. Increasing from just one company a decade ago, there are 22 life insurance companies in the country. With increasing competitiveness amongst these, the players are bringing out newer products to attract more customers into their pool. Foreign direct Investment (FDI) up to 26 per cent is permitted under the automatic route subject to obtain a License from the official regulator, Insurance Regulatory and Development Authority (IRDA). As major portion of the business come from urban market, the next step for these firms would be to tap semi-urban and rural markets.
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Market share of various Life Insurance Companies in India at the end of FY2010
Insurance Regulatory and Development Authority (IRDA)

Reforms in the Insurance sector were initiated with the passes of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously such to its schedule of framing regulations and registering the private sector insurance companies. NEW HORIZON COLLEGE OF ENGINEERING page 4
ULIPS AS AN INVESTMENT OPTION The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents.
Review of the annual report of the IRDA

The Indian economy continued to exhibit robust growth even though global economy experienced many uncertainties. The real GDP growth emanating from the industry and Services sector declined slightly during 2007-08. The continued acceleration in saving and Investment rates and sustained productive growth were the underpinnings of the growth momentum in the Indian economy during 2007-08. The real GDP growth in 2007-08 though High at 9 per cent was lower than the 9.6 per cent recorded in 2006-07. Services sector Continued to grow at double digit level. The deceleration in the industry sector was also reflected in the Index of Industrial Production. Gross domestic savings as per cent of GDP at Current market prices increased from 34.3 per cent in 2005-06 to 34.8 per cent in 2006-07 Contributed mainly by increase in the savings of private corporate sector and the public sector. The saving preference of the households had slightly shifted away from the bank deposits in 2007-08 from that of 2006-07.According to the preliminary estimates released by RBI on Household financial savings for 2007-08, insurance funds constituted 17.5 per cent of the total Gross financial savings of the households in 2007-08. This has resulted in an increase in the Share of insurance funds in the total household savings. The above shift in the preferences Towards insurance sector was mainly on account of the households preferring to invest in Unit Linked Insurance Products (ULIPs) of life insurers in the back ground of bullish stock market As the returns of a part of ULIPs depend on the behavior of the stock NEW HORIZON COLLEGE OF ENGINEERING page 5
ULIPS AS AN INVESTMENT OPTION market. It may be noted that during 2007-08, the BSE Sensex has shown abnormally high levels and the gains were across all sectors of the index. The Insurance sector in India governed by Insurance Act, 1938, The Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972 Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related acts. With such a large population and the untapped market area of this population insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15 - 20% annually. Together with banking services, it adds about 7% to the countrys GDP. In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life Insurance cover and the Health Insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the Government in 1993 to examine the various aspects of the industry. The key element of the reform process was participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes. The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run. Life is a roller coaster ride and is full of twists and turns. You cannot take anything for granted in life. Insurance policies are a safeguard against the uncertainties of life. Insurance is system by which the losses suffered by a few are spread over many, exposed
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ULIPS AS AN INVESTMENT OPTION to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance policy helps in not only mitigating risks but also provides a financial cushion against adverse financial burdens suffered.
What Is Insurance?
Insurance is a contract between two parties, the insurer or the insurance company, and the insured, the person seeking the cover. Within this contract, the insurer agrees to pay the insurer for financial losses arising out of any unforeseen events or risk in return for a regular payment of premium. Thus, these insurance plans are also called as a Risk Cover Plans, which means to financially compensate for losses that occur uncertainly through accident, illness, theft, natural disaster. As you can not fight against these man-made and natural calamities, so at least be prepared for them and their aftermath by taking
insurance policies.
Insurance - Kind of Investment:

Insurance is an attractive option for investment but most people are not aware of its advantages as an investment option. Remember that first and foremost, insurance is about risk cover and protection. By buying life insurance, you buy peace of mind. Insurance also serves as an excellent tax saving mechanism. The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets.
Types of Insurance
Insurance policies cover the risk of life as well as other assets and valuables, such as, home, automobiles, jewellary etc. On the basis of the risk they cover, insurance policies can be classified into two categories: 1) Life Insurance and NEW HORIZON COLLEGE OF ENGINEERING page 7
ULIPS AS AN INVESTMENT OPTION 2) General Insurance. As the term suggests, Life Insurance covers the risk involved in a person's life, while General Insurance provides financial protection against unforeseen events, like accident, flood, earthquake, disease, etc.
Insurance Regulatory & Development Authority:

Insurance Regulatory & Development Authority is regulatory and development authority under Government of India in order to protect the interests of the policyholders and to regulate, promote and ensure orderly growth of the insurance industry.
Insurance Regulatory & Development Authority:

Insurance Regulatory & Development Authority is regulatory and development authority under Government of India in order to protect the interests of the policyholders and to regulate, promote and ensure orderly growth of the insurance industry. It is basically a ten members' team comprising of a Chairman, five full time members and four part-time members, all appointed by Government of India. This organization came into being in 1999 after the bill of IRDA was passed in the Indian parliament.
Powers and Functions of IRDA

It issues the applicants in insurance arena, a certificate of registration as well as renewal, modification, withdrawal, suspension or cancellation of such registrations. It protects the interests of the policy holders in any insurance company in the matters related to the assignment of policy, nomination by policy holders, insurable interest,
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ULIPS AS AN INVESTMENT OPTION and resolution of insurance claim, submission value of policy and other terms and proposals in the contract. It also specifies obligatory credentials, code of conduct and practical instructions for mediator as well as the insurance company. Apart from this, it also defines the code of conduct for the surveyors and loss assessors involved with the insurance business. One of the major functions of IRDA includes endorsing competence in the insurance business. Apart from this, upholding and regulating professional organizations in insurance and re-insurance business is also a major duty of IRDA.
IRDA is also entitled to for asking information, undertaking inspection and investigating the audit of the insurers, mediators, insurance intermediaries and other organizations related to the insurance sector.
It is also concerned with the regulation of the rates, profits, provisions and conditions that may be offered by insurers in respect of general insurance business if it is not controlled or regulated by the Tariff Advisory Committee.
It is also entitled to supervise the functioning of the Tariff Advisory Committee. IRDA specifies the terms and pattern in which books of accounts are to be maintained and statement of accounts shall be provided by insurers and other insurance mediators.
It also regulates investment of funds by insurance companies as well as the maintenance of margin of solvency.
It is also empowered to be involved in the arbitration of disagreements between insurers and intermediaries or insurance intermediaries.
It is meant to specify the proportion of premium income of the insurer to finance policies.
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ULIPS AS AN INVESTMENT OPTION IRDA also specifies the share of life insurance business and general insurance business to be accepted by the insurer in the rural or social sector.
Impact of IRDA on Indian Insurance Sector:

The creation of IRDA has brought revolutionary changes in the Insurance sector. In last 10 years of its establishment the insurance sector has seen tremendous growth. When IRDA came into being; only players in the insurance industry were Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC), however in last decade 23 new players have emerged in the filed of insurance. The IRDA also successfully deals with any discrepancy in the insurance sector.
COMPANY PROFILE
INTRODUCTION:
Established on 14th August 2000, HDFC Standard Life Insurance Co. Ltd. is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited) India's leading housing finance institution, and a Group Company of the Standard Life Plc, UK. The Company is one of leading private insurance companies, offering a range of individual and group insurance solutions, in India. Being a joint venture of top financial services groups, HDFC Standard Life has adequate financial expertise to manage longterm investments safely and resourcefully. HDFC Standard Life Insurance offers a range of individual and group solutions, which can be easily personalized to specific needs. Its group solutions have been planned to offer complete flexibility, together with a low charging structure. As of 31 December, 2008, the Company's new business premium income stood at Rs. 1,839.70 Crores; it has covered over 812,811 lives so far.
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The partnership:
HDFC Standard Life first came together for a possible joint venture, enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar value and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3 years joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the relationship. The next three years were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Despite this both companies remained firmly committed to the venture. In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also started to use the service of the HDFC Treasury department to advise them upon their investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000 an expert team from the UK joined a hand picked team from HDFC to form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank. In a further development Standard Life agreed to participate in the Asset Management Company promoted by HDFC to enter the mutual fund market. The Mutual Fund was launched on 20th July 2000.
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NATURE OF INVESTMENT / RISK AND RETURN CATEGORY: Equity funds:

Primary invested in company stock with a general aim of capital appreciation. Risk and Return: Medium
Income, Fixed Interest and Bond Funds:

Invested in corporate bonds, Govt. securities and other fixed income instrument Risk and Return: Medium
Cash Funds:
Some times known as money market funds invested in cash, Bank deposits and money market instruments. Risk and Return: Low
Balanced Funds:
Combining equity investment with fixed interest in the instrument. Risk and Return: Medium
CHARGES OF HDFC STANDARD LIFE INSURANCE COMPANY:

HDFC Standard Life Insurance follows the method of cancelling the units in order to recover the charges. Some of the charges are:
CHARGES: PREMIUM ALLOCATION CHARGE:
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ULIPS AS AN INVESTMENT OPTION This is a premium based charge, after deducting this charge from your premiums, the reminders is invested to buy units. The table given below will help show how percentage of premium will help to buy units. This % is called the allocation rate. The allocation rates are guaranteed for the entire duration of the policy term.
Premium paid during years Regular premiums Up to 1,99,999 Fro m 2,00,000 to 4,99,999 Fro m 500,000 to 9,99,999 Fro m 10,00,000 to 19,99,999 Fro m 20,00,000 to above Single premium top ups
Allocation rate 1st & 2nd Year Onwards 70% 80% 85% 90% 95% 97.5%
3 rd Year onwards 99% 99% 99% 99% 99% 99%
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Fund management charge (FMC):

In the long term the key to build great maturity values is a low FMC. The daily unit price already increases our low fund management charge of only o.8% per annum of the funds value. Surrender charge: This is the charge we will apply when the policy is surrendered. It is equal to 30% of the difference between the regular premiums expected and received in the first two years of the contract.
Other charges:
The following is the set of other charges that we will take from your policy. Charges Policy administration charge Explanation A charge of Rs. 20 per month is charged to cover regular administration costs. We take the charge by cancelling units proportionately from each of the funds you have Mortality and other chosen. risk Every month we make a charge for providing you with the death or critical illness cover in your policy. The amount of the charge taken each month depends on your age. Switching charge Partial withdrawal Charge We take the charge by cancelling units proportionately from each of the funds you have chosen. 24 switches will be given free in a policy year and any additional switch will be charged at Rs. 100 per switch. 6 partial withdrawal requests will be free in a policy year and any additional partial withdrawal requests will be charged at Rs. 250 per request. NEW HORIZON COLLEGE OF ENGINEERING page 14
benefit charges
ULIPS AS AN INVESTMENT OPTION Revival charge Miscellaneous charge A charge of Rs. 250 is for revival to cover for administration expenses. This is a charge levied for any alterations within contract like premium redirection or adhoc policy servicing, 12 premium redirection requests will be free in a policy year any premium redirection requests will be charge at 250 per request, 6 policy servicing requests will be free in a policy year and any additional policy Servicing requests will be charged at Rs.250 per request. Service tax and education is payable at the applicable rates on the mortality and other risk benefit charges.
Alteration charges:
Current charges cannot be charged without prior approval from IRDA. The fund management charge cannot exceed 2% per annum. The surrender charge can be increased subject to a maximum of 10% of the fund applicable for the first 3 years. The policy administration charge can increase in line with inflation subject to a maximum of 5% per annum over the period since inception. The mortality charge rates and accidental death benefit charge rate are guaranteed for full duration of your policy term and critical illness charge rates can be reviewed at the end of every 3 years from date of launch of this product. And can be increased subject to a maximum increase 200% of every rate. The maximum switching charge allowed is Rs. 100 per switch increased in line with inflation subject to a maximum of 5% per annum over period since inception.
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ULIPS AS AN INVESTMENT OPTION We can charge up to Rs. 250 per request for premium redirection, partial withdrawal and other adhoc policy servicing requests. We can increase this amount in line with inflation subject to a maximum of 5% per annum over the period since inception.
HDFC Limited
HDFC Limited, Indias premier housing finance institution has assisted more than 3.3 million families own a home, since its inception in 1977 across 2400 cities and towns through its network of over 250 offices. It has international offices in Dubai, London and Singapore with service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRIs and PIOs to own a home back in India. As of December 2008, the total asset size has crossed more than Rs. 95,000 crores including the mortgage loan assets of more than Rs. 82,800 crores. The corporation has a deposit base of Rs. 17,551 crores, earning the trust of more than 9,00,000 depositors. Customer Service and satisfaction has been the mainstay of the organization. HDFC has set benchmarks for the Indian housing finance industry. Recognition for the service to the sector has come from several national and international entities including the World Bank that has lauded HDFC as a model housing finance company for the developing countries. HDFC has undertaken a lot of consultancies abroad assisting different countries including Egypt, Maldives, and Bangladesh in the setting up of housing finance companies.
Standard Life Group (Standard Life plc and its subsidiaries)

The Standard Life Group has been looking after the financial needs of customers for over 180 years. It currently has a customer base of around 7 million people who rely on the company for their insurance, pension, investment, banking and health-care needs. Its investment manager currently administers 125 billion in assets. It is a leading pensions provider in the UK, and is rated by Standard & Poor's as 'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's. Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at the Money Marketing Awards, and it was voted a 5 star life and pensions provider at the Financial Adviser Service Awards for the last 10
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ULIPS AS AN INVESTMENT OPTION years running. The '5 Star' accolade has also been awarded to Standard Life Investments for the last 10 years, and to Standard Life Bank since its inception in 1998.
Vision, Mission & Values of HDFC Standard Life Insurance Ltd.

Vision:
'The most successful and admired life insurance company, which means that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry'. 'The most obvious choice for all'.
Mission:
To be the top new life insurance company in the market. This does not just mean being the largest or the most productive company in the market, rather it is a combination of several things like Customer service of the highest order Value for money for customer professionalism in carrying out business. Innovative products to cater to different need of different customers, Use of technology to improve service standards Increasing market share. Their mission is to be the best new life insurance company in India and these are the values that will guide the country.
Values:
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ULIPS AS AN INVESTMENT OPTION SECURITY: Providing long term financial security to our policy holders will be our constant Endeavour. We will be do this by offering life insurance and pension products. TRUST: We appreciate the trust placed by our policy holders in us. Hence, we will aim to manage their investments very carefully and live up to this trust. INNOVATION: Recognizing the different needs of our customer, we will be offering a range of innovative products to meet these needs.
Values that we observe while we work:

Integrity Innovation Customer centric People Care One for all and all for one Team work Joy and Simplicity
Goals of the Company:

Emerge as transactional Life Insurer of global scale and standard. Achieve impeccable reputation and credentials through best business practices.
Guiding Principles:
Customer Care and Satisfaction. Corporate Governance. Creativity and Innovation. Competitiveness. page 18
COMPETITORS:

Life Insurance Companies Aviva Life Insurance Bajaj Allianz Life Insurance Birla Sun-Life Insurance HDFC Standard Life Insurance ING Vysya Life Insurance Life Insurance Corporation Max New York Life Insurance MetLife Insurance Om Kotak Mahindra Life Insurance Reliance Life Insurance Sahara India Life Insurance SBI Life Insurance
ORGANISATION STRUCTURE POLICIES AND PRODUCTS:

Given below is a comprehensive list of policies and products on offer by HDFC Standard Life Insurance:
Protection Plans:
HDFC Term Assurance Plan HDFC Loan Cover Term Assurance Plan HDFC Home Loan Protection Plan
Children's Plans:
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ULIPS AS AN INVESTMENT OPTION HDFC Children's Plan HDFC Unit Linked Young Star II HDFC Unit Linked Young Star Plus II HDFC Unit Linked YoungStar Champion
Retirement Plans:
HDFC Personal Pension Plan HDFC Unit Linked Pension II HDFC Unit Linked Pension Maximiser II HDFC Immediate Annuity
Savings & Investment Plans:

HDFC Unit Linked Endowment Plus II HDFC SimpliLife HDFC Unit Linked Endowment II HDFC Unit Linked Enhanced Life Protection II HDFC Unit Linked Wealth Maximiser Plus HDFC Unit Linked Endowment Winner HDFC Endowment Assurance Plan HDFC Money Back Plan HDFC Single Premium Whole of Life Insurance Plan HDFC Assurance Plan HDFC Savings Assurance Plan
Health Plans:
HDFC Critical Care Plan page 20
ULIPS AS AN INVESTMENT OPTION HDFC SurgiCare Plan
Group Plans:
Group Term Insurance Plan Group Variable Term Insurance Plan Group Unit Linked Plan - Gratuity Group Unit Linked Plan - Superannuation Group Unit Linked Plan - Leave Encashment
HDFC Standard Life believes that establishing a strong and ethical foundation is an essential prerequisite for long-term sustainable growth. To ensure this, we have concentrated our focus on expansion of branch network, organizing an efficient and well trained sales force, and setting up appropriate systems and processes with optimum use of technology. As all these areas form the basic infrastructure for establishing the highest possible customer service standards. Our core values are drilled down to all levels of employees, as these are inviolable. We continue to promote high integrity in business practices and shun short cuts and unethical practices, as we wish to be perceived as an institution with high moral standing. Since our inception in 2000, when the Indian insurance space was opened for private participation, we have consistently focused on setting benchmarks in all aspect on insurance business. Being the first private player to be registered with the IRDA and the first to issue a policy on December 12, 2000, our differentiators are:
Strong Promoter:
HDFC Standard Life is a strong, financially secure business supported by two strong and secure promoters HDFC Ltd and Standard Life. HDFC Ltds excellent brand strength emerges from its unrelenting focus on corporate governance, high standards of ethics and clarity of vision. Standard Life is a strong, financially secure business and a market leader in the UK Life & Pensions sector.
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Preferred and Trusted Brand:

Our brand has managed to set a new standard in the Indian life insurance communication space. We were the first private life insurer to break the ice using the idea of self-respect instead of death to convey our brand proposition (Sar Utha Ke Jiyo). Today, we are one of the few brands that customers recognize, like and prefer to do business. Moreover, our brand thought, Sar Utha Ke Jiyo, is the most recalled campaign in its category.
Investment Philosophy:
We follow a conservative investment management philosophy to ensure that our customers money is looked after well. The investment policies and actions are regularly monitored by a formal Investment Committee comprising non-executive directors and the Principal Officer & Executive Director. As a life insurance company, we understand that customers have invested their savings with us for the long term, with specific objectives in mind. Thus, our investment focus is based on the primary objective of protecting and generating good, consistent, and stable investment returns to match the investors long-term objective and return expectations, irrespective of the market condition.
Need Based Selling Approach:

Despite the criticality of life insurance, sales in the industry have been characterized by over reliance on tax benefits and limited advice-based selling. Our eight-step structured sales process Disha however, helps customers understand their latent needs at the first instance itself without focusing on product features or tax benefits. Need-based selling process, 'Disha', the first of its kinds in the industry, looks at the whole financial picture. Customers see a plan not piecemeal product selling.
Risk Control Framework

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ULIPS AS AN INVESTMENT OPTION HDFC Standard Life has fully implemented a risk control framework to ensure that all types of risks (not just financial) are identified and measured. These are regularly reported to the board and this ensures that the company management and board members are fully aware of any risks and the actions taken to ensure they are mitigated
Focus on Training
Training is an integral part of our business strategy. Almost all employees have undergone training to enhance their technical skills or the softer behavioural skills to be able to deliver the service standards that our company has set for itself. Besides the mandatory training that Financial Consultants have to undergo prior to being licensed, we have developed and implemented various training modules covering various aspects including product knowledge, selling skills, objection handling skills and so on.
Focus on Long term Value

HDFC Standard Life do not focus in the business of ramping up the top line only, but to create maximization of stakeholder's value. Today, we are extremely satisfied with the base that we have created for the long-term success of this company. Transparent Dealing We are one of the few companies whose product details, pricing, clauses are clearly communicated to help customers take the right decision.
Diversified Product Portfolio

HDFC Standard Lifes wide and diversified product portfolio help individuals meet their various needs, be it: Protection: Need for a sound income protection in case of your unfortunate demise Investment: Need to ensure long-term real growth of your money
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ULIPS AS AN INVESTMENT OPTION Savings: Save for the milestones and protect your savings too Pension: Need to save for a comfortable life post retirement Health: Cover for health related exigencies
AREA OF OPERATION (Servicing the customer) Operating in all part of India covering policies of entire country and has one of the widest branch networks with office in over 100 cities serving over 440 towns. During the year, company continued to increase its focus on service quality. The company aims to provide consistent and high quality service across the country through, all channels of delivery - branches, call centers, internet and the customer portal. Towards this end, periodic service audits conducted across all regional offices and at the call centers provide useful insights into customer requirements and expectations helping the company improve its processes. The company has implemented a Quality Initiative across its offices which regularly measures the effectiveness of its processes, reduces leakage and contributes to increasing revenues, managing costs and improving service quality. The company has also launched a completely revamped website with a big focus on customer education and knowledge. The company has continued to strengthen its presence in the virtual world, both for creating awareness and facilitating self service. Your company continues to explore strategic outsourcing partnerships with a focus on handling volumes and reaping economies of scale.
2.5 OWNERSHIP PATTERN The Company shall mean HDFC STANDARD LIFE INSURANCE COMPANY LIMITED Board shall mean the Board of Directors of the Company. Board Members shall mean the Members on the Board of Directors of the Company. NEW HORIZON COLLEGE OF ENGINEERING page 24
ULIPS AS AN INVESTMENT OPTION Executive Directors shall mean the Board Members who are in whole-time employment of the Company. Relative shall mean relative as defined in Section 2(41) and Section 6 read with Schedule-IA of the Companies Act, 1956. Senior Management shall mean: (a) Executives who are in the grade of General Manager and above, (b) All Executives directly reporting to the Chief Executive, (c) Chief Financial Officer, and (d) Company Secretary
2.7 Infrastructure facilities

The company opened 23 offices during the year, taking the total to 595 across the country. All the branches of HDFC SLIC are well furnished with a good dcor which induces a suitable work environment. There is a database maintained of all the people involved in the insurance process from the financial consultant to the customers for easy communication and reach The branches are computerized and all transactions of insurance policies are done with ease of operation
Telephone Intranet and internet Conference room Training room Laptop from IT department to senior manager Help line : product knowledge of HDFCSL Company e-mail For each and every employee and advisors of the company will get their personal I D where in they can login from any part of the country and update things ,
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ULIPS AS AN INVESTMENT OPTION Like perk, commission account, keep in track of product, target.
KEY MILESTONES
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate The life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers along with provident societies were taken over by the government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India. 2.9 WORK FLOW MODEL OF HDFC STANDARD LIFE
WORK FLOW MODEL OF KORMANGALA BRANCH HDFC. BRANCH MANAGER CHANNEL DEVELOPMENT MANAGER FINANCIAL CONSULTANTS CANDIDATES
MCKENSYS 7 S FRAME WORK

It is a management model that describes 7 factors to organize a company in a holistic and effective way.
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ULIPS AS AN INVESTMENT OPTION Together these factors determine the way in which a corporation operates. Managers should take into account all seven of these HDFCSL Milestone Received the PCQuest Best IT Implementation Award 2008 for Consultant Corner, the applications for its financial consultants, providing centralized control over a vast geographical spread for key business units such as inventory, training, licensing, etc. Received the 2008 CIO Bold 100 Award for its mobile workforce portal and the Special 2008 CIO Security Award for a secure computing environment, including identity management respectively. Mr. Deepak M Satwalekar Awarded QIMPRO Gold Standard Award. HDFCSL expanded its reach in the Bancassurance channel by arrangements with cooperative banks in the rural areas.Continued to increase its focus on quality service, by putting in place a robust mechanism to capture Voice of the Customer through service audits across its offices. This was complemented by use of technology that enabled capture of all interactions with customers across all touch points Sar Utha Ke Jiyo was honoured as Among Indias 60 Glorious Advertising Moments. The advertisements of the company were ranked 6th amongst The 10 most effective Advertisements in September 2007. Received the PCQuest Best IT Implementation Award 2007 for Wonders, its pathbreaking implementation of an enterprise-wide workflow system. In addition the company also bagged the EMC storage award for being the most innovative users of storage and storage management. Pension Plan Tops Mints Survey of Best TV Ads. HDFC Standard Lifes advertising created high awareness for the brand and bagged 2 silver and 1 bronze awards at the ADFEST 2007 National Awards organised by the Advertising Agencies Association of India (AAAI). The 3 awards are the highest won by any single brand in the financial services business (including banking, mutual fund, insurance and other financial services).
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ULIPS AS AN INVESTMENT OPTION Ranked 29th most trusted Indian Brands amongst the Top 50 Service Brands of 2006 according to a study conducted by the Brand Equity Economic Times, the leading business publication of India. factors, to be sure of successful implementation of a strategy. Large or small. They're all interdependent, so if you fail to pay proper attention to one of them, this may affect all others as well. On top of that, the relative importance of each factor may vary over time.
STRATEGY:
It is the plan or course of action in allocating resources to achieve identified goals over time. NEW HORIZON COLLEGE OF ENGINEERING page 28
ULIPS AS AN INVESTMENT OPTION Strategies Employed to achieve the target are as follows: Telecalling. Contacting the person directly (interview). Collect references.
STRUCTURE:
The way people & work/ tasks are organized. For proper utilization of the Structure the following steps can be followed in HDFC SLIC. Tasks define jobs. Jobs define skills required. Skills (and other considerations) define staff.
Collection of jobs basis for structure.
SYSTEMS:
All the processes & information flows that links the organization together. Communications practice and system. Management reporting system. Approval process. Planning/budgeting system. Rewards system including appraisal.
SHARED VALUES:
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ULIPS AS AN INVESTMENT OPTION These are the core values of the company that are evidenced in the corporate culture & the general work ethic. The values followed by HDFC SLIC are: Integrity Innovation Customer centric People Care One for all and all for one Team work Joy and Simplicity
STYLE:
The way the managers behave. Sales officer is reporting to resident manager or sales manager in turn the resident manger is reporting to regional manager in turn he /she reports to zonal manger in turn he /she reports to general manager sales and marketing in turn he /she reports to chief executive officer (CEO).
STAFF&SKILLS:
The employees & their general capabilities. Human Resource Development at HDFC SLIC has been an integral part of the Company since its inception. It has had a significant strategic role in the Company's growth process and continues to do so. It is a function that has contributed to the bottom line of the Company profiling system for its employees. Proper HR management processes is used to develop new managers who can lead the organization. .
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SWOT ANALYSIS
STRENGTH WEAKNESS
TEAM WORK. BEST COST TO CUSTOMERS. SKILLED MANPOWER. HIGH QUALITY PRODUCTS OR SERVICES. APPROPROATE FINANCIAL RESOURCES.
LACK OF MAN POWER IN TECHNICAL TEAM. LATE SERVICE. OLIGOPOLY PLAYER IN THE MARKET. HIGH COST.
OPPURTUNITIES A DEVELOPING MARKET. THE FIRM FACING REPAID GROWTH IN MARKETS. SECOND MONOPOLY PLAYER IN THE MARKET A MARKET VACATED BY IN INEFFECTIVE COMPETITOR.
THREATS A LOCAL COMPETITORS IN HOME MARKET. PRICE WARE WITH COMPETITORS. TAXATION ON THE PRODUCT AND SERVICE. COMPETITORS HAVE SUPERIOR ACCESS TO CHANNELS OF DISTRIBUTION.
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ANALYSIS OF FINANCIAL STATEMENT FINANCIAL RATIOS HIGHLIGHTS OF FINANCIAL YEAR 2009-10

HDFC standard had incresased its market share from 4.5% to 12% in the FY2009-2010 Total Premium Income is up by 15% at Rs. 5564.69 crores as against Rs. 4858.56 crores in FY2009-10. Renewal premium collected increased to Rs. 2913.58 crores from Rs. 2173.19 crores in the previous year, registering a growth of 34%. Effective Premium Income (EPI) in respect of retail business increased by 5%, growing from Rs 2,425 crores in 2008-09 to 2,552 crores in 2009-10.
Alternate Channels, including bank assurance, contributed about 45% to
the Effective Premium Income (EPI). A well balanced product portfolio with pension comprising over 40% Children plans around 25% and the remaining constituting protection and savings plans, Total assets under management increased to Rs. 10,595 crores, registering a growth of 24% over FY2009-10. Assets under management for the Group business have increased to Rs. 1075 crores, registering a growth of 12% over FY2009-10. Company products and services are now available through a network of 595 offices serving over 700 cities and towns across the country. This is further complemented by corporate agency relationships with public, private and co-operative banks. Strength of Financial Consultants reported year-on-year growth of 43% to over 2, 07,000 in FY2009-10 compared to 1, 45,000 last financial year.
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LEARNING EXPERIENCE The organizational study has given us a good corporate exposure & a great learning experience. We were able to learn some of the theoretical aspects which are applied in the day to day activities of the organization and those are as follows:
I had a very good corporate exposure and learnt about
Companys business. Organization Behavior. Investment alternatives. Financial management. I attended various discussions and meetings with the Channel development manager (CDM) on behalf of the company. I wrote I.R.D.A (insurance regulatory development authority) exam. I learnt how to motivate the people and make use of the benefits of the organization.
I have gone through training programmer. I have obtained all the information and explanations which, to the best of my
knowledge and belief were necessary for the purposes of my project and have found them to be satisfactory.
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CHAPTER-1 A STUDY ON UNIT LINK INSURANCE PLAN (ULIP) AS AN INVESTMENT OPTION

INTRODUCTION TO ULIP: In India, ULIP insurance policies are on the top in the popularity chart because it offers more Benefits than traditional life insurance plans. There are many benefits are available such as higher returns on investment, partial withdrawal, flexibility to choose life cover, wider fund options, top up facility, free switches, tax benefits, etc. If you are looking for long term investment and better returns, ULIP is a right option to achieve your goal. But, you may find difficulties while purchasing the ULIP, because there are single and regular premium option. You have to choose the right option for you. In single premium ULIP, you need to pay a single payment and you will enjoy the benefits throughout the policy term. In case of regular premium, you need to pay premium on regular basis, it can be paid by annual, half annual, quarterly and monthly mode.In terms of investment, both products offer similar options like equity, debt and liquid.Under regular premium option you may ask for commitment to pay more. But, under single premium product nobody will ask you to pay more as a matter of commitment.In the initial years of ULIP, single premium product offer better returns than regular premium product. But, its balance power shifts down latter. But this is not in effect, the product is sold very aggressively due to IRDA norms. Regular premium ULIP products are also good in various factors such as affordability, tax benefit and large return. There are also ULIP charges to consider than single and regular premium. It is also important to take an overview of different charges are under ULIP plans. It includes premium allocation charge, risk cover charges, policy administration charges, fund management charges, service tax charge, miscellaneous charge, etc. At the end, ULIP is a good mixture of life cover and investment. But don't buy it for
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ULIPS AS AN INVESTMENT OPTION investment purpose only, there are another good options available for the investment. Unit Linked insurance plan (ULIP) is a life insurance solution that provides the client with the benefits of protection and flexibility in investment.
WHAT IS ULIP?
ULIP stands for Unit Linked Insurance Plans. As we know that insurance is for protecting our life from the any uncertain events like death or accident. The purpose of the normal insurance plan is just protecting the life but not ensuring any savings for the future. Many people wanted plan which gives protection also gives the returns for their investment. So, insurance companies come up with the ULIP plan where the premium about is invested in the share market and returns better income on the maturity period. Unit-linked insurance plans, ULIPs, are distinct from the more familiar with profits policies sold for decades by the Life Insurance Corporation. With profits policies are called so because investment gains (profits) are distributed to policyholders in the form of a bonus announced every year. ULIPs also serve the same function of providing insurance protection against death and provision of long-term savings, but they are structured differently. In with profits policies, the insurance company credits the premium to a common pool called the life fund, after setting aside funds for the risk premium on life insurance and management expenses. Every year, the insurer calculates how much has to be paid to settle death and maturity Claims. The surplus in the life fund left after meeting these liabilities is credited to Policyholders accounts in the form of a bonus. In a ULIP too, the insurer deducts charges towards life insurance (mortality charges), administration charges and fund management charges. The rest of the premium is used to invest in a fund that invests money in stocks or bonds. The policyholders share in the fund is represented by the
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ULIPS AS AN INVESTMENT OPTION number of units. The value of the unit is determined by the total value of all the investments made by the fund divided by the number of units. If the insurance company offers a range of funds, the insured can direct the company to invest in the fund of his choice. Insurers usually offer three choices an equity (growth) fund, balanced fund and a fund which invests in bonds. In both with profits policies as well as unit-linked policies, a large part of the first year premium goes towards paying the agents commissions.
WHICH IS BETTER, UNIT-LINKED OR WITH PROFITS?

The two strong arguments in favor of unit-linked plans are that the investor knows exactly what is happening to his money and two; it allows the investor to choose the assets into which he wants his funds invested. A traditional with profits, on the other hand, is a black box and a policyholder have little knowledge of what is happening. An investor in a ULIP knows how much he is paying towards mortality, management and administration charges. He also knows where the insurance company has invested the money. The investor gets exactly the same returns that the fund earns, but he also bears the investment risk. The transparency makes the product more competitive. So if you are willing to bear the investment risks in order to generate a higher return on your retirement funds, ULIPs are for you. Traditional with profits policies to invest in the market and generate the same returns prevailing in the market. But here the insurance company evens out returns to ensure that policyholders do not lose money in a bad year. In that sense they are safer. ULIPs also offer flexibility. For instance, a policyholder can ask the insurance company to liquidate units in his account to meet the mortality charges if he is unable to pay any premium installment. This eats into his savings, but ensures that the policy will continue to cover his life.
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CHARGES UNDER ULIP

1. Contribution Related Charges These are the charges that are represented as a percentage of the regular or single contribution paid. In case of a regular contribution plan, it is usually high in the first year to pay for the distribution cost. This charges pays for the issuance and for distribution commissions. This charges are running for the policy. 2. Administrative Charges These are charges that are levied for the administration of the policy and the related cost of administration of the insurance company, itself. They are more related to the cost like IT, operational, etc cost of continuing the policy. 3. Fund Management Charges These are the charges for buying and selling debt and equity. These are the charges are adjusted in NAV itself. 4. Mortality Charges This covers the cost of providing life protection for the insured and may be paid once at the start of the policy for a recurrent manner for example this charges levied to provide NEW HORIZON COLLEGE OF ENGINEERING page 37
ULIPS AS AN INVESTMENT OPTION the insurance cover under the plan. normally these charges are one year charges as per the age of the holder. 5. Rider charges Rider charges are similar in nature to the mortality charges as they are levied to pay for the other protection benefits that the policy holder has chosen for- like the critical illness benefit Or the accident benefit, etc. 6. Surrender Charges When the policy holder decides to surrender the policy or partially withdraw some of the units for cash, a surrender charge may apply. Surrender charges are used to cover initial expenses that have been incurred by the company but not yet recovered from the policyholder yet. 7. Bid offer Charges In ULIP specifically certain insurers might create a difference in the price at which they sell the unit and the price at which they buy the units. Investors contribution are used to buy units in the investment fund at the offer price and are sold when benefits are required at the bid price. The difference between the offer and bid prices Is known as the bidoffer spread", this is used to cover expenses when setting up the policy. 8. Transactional specific Charges These charges are levied when the client does some specific transaction like changing funds, Topping up the investment component or withdrawals.
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BENEFITS OF UNIT LINKED PLAN

ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The plan is a one stop solution providing: 1. Life protection. 2. Investment and Savings.
Market linked fund based on risk profile. Premium redirection.
Switch option.
Automatic transfer plan (ATP).
3. Flexibility of cover continuance. 4. Transparency. 5. Extra protection with riders. Death due to accident Disability Critical illness 6. Liquidity During the term partial withdrawals At Maturity. 7. Tax planning.
HOW TO SELECT THE RIGHT ULIP
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ULIPS AS AN INVESTMENT OPTION For a product capable of adding significant value to investors' portfolios, ULIPs have far too many critics. We at Personal have interacted with a number of investors who were very disillusioned with their ULIPs investments; often the disappointment stemmed from poor and inappropriate selection. We present a 5-step investment strategy that will guide investors in the selection process and enable them to choose the right ULIP. 1. Understand the Concept of ULIPs Do as much homework as possible before investing in an ULIP. This way you will be fully Aware of what you are getting into and make an informed decision. More importantly, it will ensure that you are not faced with any unpleasant surprises at a later stage. Our experience suggests that investors on most occasions fail to realize what they are getting into and unscrupulous agents should get a lot of 'credit' for the same. Gather information on ULIPs, the various options available and understand their working. Read ULIP-related information available on financial Web sites, newspapers and sales literature circulated by insurance companies. 2. Focus On Your Need And Risk Profile. Identify a plan that is best suited for you (in terms of allocation of money between equity and debt instruments). Your risk appetite should be the deciding criterion in choosing the plan. As a result if you have a high risk appetite, then an aggressive investment option with a higher equity component is likely to be more suited. Similarly your existing investment portfolio and the equity-debt allocation therein also need to be given due importance before selecting a plan. 3. Compare ULIP Products from Various Insurance Companies Compare products offered by various insurance companies on parameters like expenses,
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ULIPS AS AN INVESTMENT OPTION Premium payments and performance among others. For example, information on premium payments will help you get a better picture of the minimum outlay since ULIPs work on premium payments as opposed to sum assured in the case of conventional insurance products. Compare the ULIPs' performance i.e. find out how the debt, equity and balanced schemes are performing; also study the portfolios of various plans. Expenses are a significant factor in ULIPs, hence an assessment on this parameter is warranted as well.Enquire about the top-up facility offered by ULIPs i.e. additional lump sum investments which can be made to enhance the policy's savings portion. This option enables policyholders to increase the premium amounts, thereby providing presenting an opportunity to gainfully invest any surplus funds available. Find out about the number of times you can make free switches (i.e. change the asset allocation of your ULIP account) from one investment plan to another. Some insurance companies offer multiple free switches every year while others do so only after the completion of a stipulated period. 4. Go for an Experienced Insurance Advisor Select an advisor, who is not only conversant with the functioning of debt and equity markets, but also independent and unbiased. Ask for references of clients he has serviced earlier and Cross-check his service standards. When your agent recommends a ULIP from a given company, put forth some product-related questions to test him and also ask him why the products from other insurers should not be considered. Insurance advice at all times must be unbiased and independent; also your agent must be willing to inform you about the pros and cons of buying a particular plan. His job should not be restricted to doing paper work like filling forms and delivering receipts; instead he should keep track of your plan and offer you advice on a regular basis.
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ULIPS AS AN INVESTMENT OPTION 5. Does Your ULIP Offer A Minimum Guarantee? In a market-linked product, protecting the investment's downside can be a huge advantage. Find out if the ULIP you are considering offers a minimum guarantee and what costs have to be borne for the same.
ARE ULIPS SIMILAR TO MUTUAL FUNDS?

In structure, yes; in objective, no. Because of the high first-year charges, mutual funds are a better option if you have a five-year horizon. But if you have a horizon of 10 years or more, then ULIPs have an edge. To explain this further a ULIP has high first-year charges towards acquisition (including agents commissions). As a result, they find it difficult to outperform mutual funds in the first five years. But in the long-term, ULIP managers have several advantages over mutual fund managers. Since policyholder premiums come at regular intervals, investments can be planned out more evenly. Mutual fund managers cannot take a similar long-term view because they have bulk investors who can move money in and out of schemes at short notice.
WHY DO INSURERS PREFER ULIPS?

Insurers love ULIPs for several reasons. Most important of all, insurers can sell these policies with less capital of their own than what would be required if they sold traditional policies. In traditional with profits policies, the insurance company bears the investment risk to the extent of the assured amount. In ULIPs, the policyholder bears most of the
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ULIPS AS AN INVESTMENT OPTION investment risk. Since ULIPs are devised to mobilize savings, they give insurance companies an opportunity to get a large chunk of the asset management business, which has been traditionally dominated by mutual funds. ADVANTAGE 1. The accretion to the fund invested can be checked on daily basis unlike the traditional Policies. 2. There is lot more flexibility like partial withdrawal, switching, redirection, early withdrawal, Sum Assured reduction, top up contribution, etc. 3. Charges are transparent in nature, with the latest AML guidelines insisting on common nomenclature of charges for all insurance companies. 4. The customer can time the market by exercising switch options and make the most when markets are zooming or choose to be conservative when markets are falling. Its thus win-win situation 5. He gets a life cover at a nominal cost unlike mutual funds, 6. Almost all companies provide riders like accidental death and disability/dismemberment riders, critical illness rider, hospital cash benefit rider, income loss rider, etc 7. Stages in one life like education of children, marriage, and retirement needs can be soundly planned by the help of ULIPs. 8. Tax advantages are also offered by the ULIPs.
DISADVANTAGES 1. Investors find it difficult to understand the nuances of capital market and therefore go by the herd mentality. i.e., they invest because their friends and family is investing without understanding how ULIPS are designed. 2. ULIPS are attractive for risk taking people and less attractive for risk adverse people. 3. Some consider taking term insurance and a mutual fund as a combination to
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ULIPS AS AN INVESTMENT OPTION beat the ULIP. 4. Some consider charges levied exorbitant and not commensurate to the returns offered 5. The complicated design of the polices make them less aware of the product features and chances of misspelling by agents are very high.
ULIP AND MUTUAL FUNDS DIFFERENCE?

In structure both ULIP and Mutual Funds looks similar. But, in objective they are different. Because of the high first-year charges, mutual funds are a better option if you have a five-year horizon. But if you have a horizon of 10 years or more, then ULIPs have an edge. To explain this further a ULIP has high first-year charges towards acquisition (including agents commissions). As a result, they find it difficult to outperform mutual funds in the first five years. But in the long-term, ULIP managers have several advantages over mutual fund managers. Since policyholder premiums come at regular intervals, investments can be planned out more evenly. Mutual fund managers cannot take a similar long-term view because they have bulk investors who can move money in and out of schemes at short notice. Unit Linked Insurance Plan, popularly called ULIP, it is to be borne in mind that ULIPs being a market linked instrument will fetch good returns on a long term basis. The basic advantage of a ULIP over other investment instruments is that it offers the twin benefits of life insurance as well as an investment. Apart from that, there are a number of ways in which ULIPs can prove to be advantageous over Mutual Funds, Regular Insurance Policies and Fixed Deposits. Lets analyze:
ULIP VS MUTUAL FUND

1. Flexibility on Mode of Investment/investment amounts ULIP provide the flexibility to alter the premium amounts during the policys tenure. Surplus funds can be used to enhance the contribution thereby ensuring that the funds are NEW HORIZON COLLEGE OF ENGINEERING page 44
ULIPS AS AN INVESTMENT OPTION gainfully invested. Alternatively, lower payments can be made when faced with a liquidity crunch (the difference being adjusted in the accumulated value of the ULIP). This option of modifying premium payments at ones convenience clearly give ULIP an edge over Mutual Funds. 2. The cost factor for altering Asset Allocation In Mutual Funds, shifting the corpus into a debt from the same fund house will involve an exit load and/or entry load. On the other hand, in a ULIP, the option to invest across asset classes as per your convenience is very cost-effective Most insurance companies allow shifting the investments across various plans/asset classes either at a nominal or no cost. This can prove to be very useful. For example, in a bull market when the ULIP investors equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt oriented plan. 3. Tax Benefits ULIPs qualify for tax benefits under Section 80C of the Income Tax Act. This holds good for any kind of plan chosen by the investor. In Mutual Funds, only investments in taxsaving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits.
ULIP VS REGULAR INSURANCE POLICY

ULIPs and Traditional policies both work alike. A part of the premium is set aside for life cover and the rest are invested in a fund after deducting charges. NEW HORIZON COLLEGE OF ENGINEERING page 45
ULIPS AS AN INVESTMENT OPTION The main advantage of a ULIP is that the investor knows exactly about the break-up of his Premium into life cover, the fees being paid and the amount being invested in a fund. The performance of the funds can also be tracked as the returns are linked to the market Performance. On the other hand, in traditional policies, no information about the breakup of a charge is shared with the investor. He also does not know whether the bonuses paid to him every year is all that his fund has made or whether the company is giving him only a share of the profits. Policies encourage savings whereas ULIPs take the investment path and hence have higher growth options.
ULIP VS FIXED DEPOSIT

There is always a degree of risk, however small, involved in a ULIP. Traditionally, investors preferred investing in safer instruments like Fixed Deposits, despite the lower returns. But Fixed Deposits are able to only beat the inflation. On the other hand a ULIP is a market linked plan with an equity exposure. A plan with an equity exposure for a long term usually consistently gives better returns than any other asset like Fixed Deposit or Bonds.
ULIP AN BETTER INVESTMENT OPTION FOR YOUR MONEY

Maximiser: If high growth is your priority, this is the plan for you. You can enjoy long-term Capital appreciation from a portfolio that is invested primarily in equity and equityrelated Securities. Protector:
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If on the other hand, your priority is steady returns, you can opt for the protector Plan. Plan, you can accumulate a steady income at a low risk across a medium to longterm Period from a portfolio, which is primarily, invested in fixed income securities. Balancer: If you prefer a balance of growth and steady returns, choose our balancer plan. This would ensure that your portfolio is invested in equity-linked securities, as well as in fixed income securities. Preserver: The objective of this plan is not ensuring capital protection by investing in very Low risk investments like the cash and call money markets. However, the returns generated may also be on the lower side due to the investment pattern. At inception, investments up to 20% can be allocated to this fund.
ARE UNIT-LINKED INSURANCE PLANS GOOD?

Most insurers in the year 2004 have started offering at least a few unit-linked Plans. Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a Combination of insurance and mutual funds. The number of units that a customer would get would depend on the unit price when he pays his premium. The daily unit price is based on the market value of the underlying assets (equities, bonds, government securities, et cetera) and Computed from the net asset value. NEW HORIZON COLLEGE OF ENGINEERING page 47
The advantage of unit-linked plans is that they are simple, clear, and easy to Understand. Being transparent the policyholder gets the entire upside on the Performance of his fund. Besides all the advantages they offer to the customers, unit-linked plans also lead to an efficient utilization of capital. Unit-linked products are exempted from tax and they provide life insurance. Investors welcome these products as they provide capital appreciation even as the yields on government securities have fallen below 6 per cent, which has made the insurers slash payouts. According to the IRDA, a company offering unit-linked plans must give the investor an option to choose among debt, balanced and equity funds. If you Opt for a unit-linked endowment policy, you can choose to invest your Premiums in debt, balanced or equity plans If you choose a debt plan, the majority of your premiums will get invested in debt securities like gilts and bonds. If you choose equity, then a major portion Of your premiums will be invested in the equity market. The plan you choose would depend on your risk profile and your investment need. The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. This is especially so if one also believes that current market values (stock valuations) are relatively low. So if you are opting for a plan that invests primarily in equity, the buzzing market could lead to windfall returns. However, should the buzz die down, investors could be left stung. If one invests in a unit-linked pension plan early on, say when one is 25, one can afford to take the risk associated with equities, at least in the plan's initial stages. However, as one approaches retirement the quantum of returns should be subordinated to capital preservation. At this stage, investing in a plan that
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ULIPS AS AN INVESTMENT OPTION has an equity tilt may not be a good idea. Considering that unit-linked plans are relatively new launches, their short history does not permit an assessment of how they will perform in different phases of the stock market. Even if one views insurance as a long-term Commitment, investments based on performance over such a short time span may not be appropriate.
ULIPS- SYSTEMATIC INSURANCE CUM INVESTMENT PLAN

Any individual who has purchased a life insurance policy in the last year or so surely would have a Unit Linked Insurance Plan (ULIP). ULIPs have been selling like Wonder Products in the recent past and they are likely to continue to outsell their plain vanilla counterparts going ahead. A ULIP is a market-linked insurance plan. The difference between a ULIP and other insurance plans are the way in which the premium money is invested. Premium from, say, an Endowment plan, is invested primarily in risk-free instruments like government securities (gsecs) and AAA rated corporate paper, while ULIP premiums can be invested in stock markets in addition to corporate bonds and gsecs. So what else apart from this reason makes ULIPs so attractive to the individual? Here, we have explored some reasons, which have made ULIPs so irresistible. Transparency
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ULIPS AS AN INVESTMENT OPTION However, ULIPs offer a transparent option for customers to plan their various life stage needs through market-led investments as compared to traditional investment plans. Insurance cover plus savings ULIPs serve the purpose of providing life insurance combined with savings at marketlinked returns. To that extent, ULIPs can be termed as a two-in-one plan in terms of giving an individual the twin benefits of life insurance plus savings. This is unlike comparable instruments like a mutual fund for instance, which does not offer a life cover.
Multiple investment options ULIPs offer variety than traditional life insurance plans. So there are multiple options at the individual's disposal. ULIPs generally come in three broad variants Aggressive ULIPs (which invest 80%-100% in equities, balance in debt)
Balanced ULIPs (invest around 40%-60% in equities)
Conservative ULIPs (invest up to 20% in equities), Although this is how the ULIP options are generally designed, the exact debt/equity allocations may vary across insurance companies. A ULIP policyholder has the option to invest in a variety of funds, depending on his risk profile. If one does not have the appetite to invest in equity, they can choose a debt or balanced fund. Flexibility Individuals can switch between the ULIP variants outlined above to capitalize on investment opportunities across the equity and debt markets. Some insurance companies
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ULIPS AS AN INVESTMENT OPTION allow a certain number of free' switches. For instance, when stock markets were on the brink of 7,000 points (Sensex), the informed investor could have shifted his assets from an Aggressive ULIP to a low-risk Conservative ULIP.They can shift from an Aggressive to a Balanced or a Conservative ULIP as they approach retirement. Works like a SIP Rupee cost-averaging is another important benefit associated with ULIPs. Individuals have probably already heard of the Systematic Investment Plan (SIP), this is increasingly being advocated by the mutual fund industry. With an SIP, individuals invest their monies regularly over time intervals of a month/quarter and don't have to worry about `timing' the stock markets. These are not benefits peculiar to mutual funds. Not many realize that ULIPs also tend to do the same, albeit on a quarterly/half-yearly basis. As a matter of fact, even the annual premium in a ULIP works on the rupee cost-averaging principle.
VARIOUS ULIP PLAN PROVIDED BY HDFC:

ProtectionNeed for a sound income protection in case of your unfortunate demise. InvestmentNeed to ensure long-term real growth of your money. SavingSave for the milestones and protect your savings too. PensionNeed to save for a comfortable life Post retirement. NEW HORIZON COLLEGE OF ENGINEERING page 51
ULIPS AS AN INVESTMENT OPTION Once you have analyzed your needs as per above classification, you need to then ascertain important factors such as type of cover, insurance amount as per one's income, life stage and dependents. It is difficult to arrive at all these Figures yourself. Our financial consultants can help you with all analysis to offer a customized solution by doing a thorough need analysis. So contact financial Consultants to help you choose the right plan for you. Your insurance need will change as your life does, from starting to work to enjoying your golden years and all the stages in between. Each one of these stages may pose a different insurance need/cover for you. In this section, we have drawn up the basic life stages and help you analyze various insurance needs accordingly.
STAGE 1
Young and SingleAn important Stage where one lays down the foundation of a successful life ahead. Take advantage of the time and power of compounding to ensure that you build up your dreams. Start saving early; Youre Needs 1 Save for a home and wedding. 2 Tax Planning. 3 Save for Golden years.
STAGE 2
Just Married - Marriage brings about a significant change. New dreams and new opportunities also bring in additional responsibilities. While both of you look forward to a happy and secure life, it is equally important to ensure that eventualities don't come in the way of shaping your dreams. Youre Needs 1 Planning for home/securing your home loan liability 2 Save for vacation 3 Save for your first child
STAGE 3
Proud Parents - Once you have children, your need for life insurance is even more. You need to protect your family from an untoward incident. Ensure your protection umbrella takes into Account the future cost of securing your child's dream. You will want life to go on for your loved ones, and having enough life insurance is a way to help ensure that. Your needs 1 Provide for children's education. 2 Safeguarding family against loan liabilities. 3 Savings for post-retirement.
STAGE 4
Planning for Retirement - While you are busy climbing the ladder of success today, it is important for you to take time and plan for your life after retirement. Having an early start for retirement planning can make a significant difference to your savings. Think about your golden years even before you have reached them. The Key is to think ahead and plan well using your time and money. NEW HORIZON COLLEGE OF ENGINEERING page 53
Your needs 1 Provide for regular income post retirement. 2 Provide for regular income post retirement. 3 Lead a secure, independent and comfortable life style in your retirement year.
POINTS OF PARITY FUNDS AVAILABLE WITH ULIP PLANS
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Generally all life insurance companies have three types of fund which are Equity fund, Debt fund and Balance fund. These funds have different risk profile. Equity fund has high risk but it gives high return, Debt fund has low risk so it gives low return and balanced fund is combination of both Equity and Debt fund so risk is medium and return is also low.
FUND OPTIONS AND MANAGEMENT OF ULIP:
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ULIPS AS AN INVESTMENT OPTION Understand the various fund options available to you and the fund management philosophy and objectives of each of them. Examine the track record of the funds and how they are performing in comparison to benchmarks. Who manages the funds and what experience do they have? Are there adequate controls? Importantly, look at how easily you can access information about your fund's performance when you need it -- are their daily NAVs? Is the portfolio disclosed regularly?
FEATURES: Most ULIPs are rich in features such as allowing one to top-up or switch between funds, increase or decrease the protection level, or premium holidays. Carefully understand the conditions and charges associated with each of these. For instance, is there A minimum amount that must be switched? Is there a charge on the same? Must you go through medical underwriting if you want to increase the sum assured? COMPANY: Last but not least, insure with a brand you can trust to honor its commitment and service you according to your requirements. First and foremost, investors need to understand that a ULIP is a bundled product of their investments and their insurance proceeds. Since privatization in 2000 and the introduction of ULIPs as a life insurance product category, the overall insurance penetration in the country has grown from around 2% to 4%. Today, more than 70 per cent of the new business premium for life insurers comes from Ulips.
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ULIPS AS AN INVESTMENT OPTION All Ulips have several funds in which your money can be put to work, much like a mutualfund. Assuming that you choose the growth or the equity plan, ask for the NAV Performance for the last two years at least. Choose three with the highest performance track record vis-a-vis the benchmark. Now choose the best performing policy in terms of returns with the lowest cost. Here's a 5-step investment strategy that will guide investors in the selection process and enable them to choose the right unit-linked insurance plans (ULIPs). But before we get there, let's understand what ULIPs are all about? For the generation of insurance seekers who thrived on insurance policies with assured returns issued by a single public sector enterprise, unit-linked insurance plans are a revelation. Traditionally insurance products have been associated with attractive returns coupled with tax benefits. The returns part was often so compelling that insurance products competed with investment products for a place in the investor's portfolio. Perhaps insurance policies then were symbolic of the times when high interest rates and the absence of a rational risk-return trade-off were the norms. The subsequent softening of interest rates introduced a degree a much-needed rationality to insurance products like endowment plans; attractive returns at low risk became a thing of the past. The same period also coincided with an upturn in equity markets and the emergence of a new breed of market-linked insurance products like ULIPs.
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TITLE OF THE STUDY

A STUDY ON ULIP AS AN INVESTMENT OPTION A Study has been conducted in the area of ULIP AS AN INVESTMENT OPTION at HDFC STANDARD LIFE INSURANCE CO LTD.
STATEMENT OF THE PROBLEM

It is always very difficult to make investment decisions in this world of insurance business. It demanded investors to be knowledgeable and tact full regarding the insurance market. Since, many ULIP products are introduced with in a very short span of time; people even having lot of money are confused to invest their hard earning money in effective manner in insurance sector, because they need their own preferred ULIP policies to invest. Unit linked insurance plan (ULIP) of HDFC standard life to know the investment pattern in insurance market. Because there are lots of insurance companies offering a number of insurance policies with different schemes and benefits these policies have to frame considering interest and preferences of the different kinds of people. The insurance companies has to know which type of the policies can satisfy the needs and preferences of the different people in the society, so that the investor can invest his/ her savings in those policies which are most suitable & beneficial. Therefore the study emphasizes on: Investors preferences and awareness regarding ULIP products.
ULIPs a better investment option for investor money.
Mobilization of savings of investors.
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OBJECTIVES OF THE STUDY

The Objective of the study is to determine the extent of awareness of financial planning in India and the understanding of insurance among the masses. The Scope of the study involves: To understand the concept of financial planning.
To compare traditional investment instruments (Mutual Funds etc.) with investment in Insurance.
To study the growth pattern and reasons for growth of INSURANCE (ULIP)
market in India.
To study ULIP as an investment alternative/option.
To know how the people make investment decisions.
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RESEARCH METHODOLOGY / DESIGN

Type of Study: The study at HDFC SLIC is a combination of analytical and practical study. It is based on data collected from records of the company and is administered to various departmental heads connected with Fund Management. Types of Data: 1. Primary Data: This data was collected from discussions and interactions with our respective mentor by: Observation method. Interviewing method. Through questionnaires.
2. Secondary Data: Secondary data means data that are already available that is they refer to the data which have already been collected and analyzed by someone else. The sources of secondary data can be given as under. Various publications of the central, state and the local
governments.
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ULIPS AS AN INVESTMENT OPTION Various publications of foreign government or of
international bodies and their subsidiary organizations.
Technical trade journals. Books, magazines and newspapers. Reports and publications of various associations connected
with business and industry banks stock exchanges etc. Public records and statistics, historical documents and other
sources of published information.
In my study I have used both primary and secondary data. For primary data collection I have prepared a questionnaire consisting of respondents. In the secondary data I have used the information available with the branch and from the organization website www.hdfcinsurance.com open end questions. Questions are prepared in such a way maximum information can be obtained from the
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1: PLANNING OF THE SURVEY:Preplanning is sine-guenon for any kind of survey. There must be some preliminary Preparation. first and foremost I decided the topics to works on and then prepared some question related to the topic considering every possible point of view .finally, I framed the questionnaire and I used simple words and easy sentences to be fairly understood.
2:-OBJECTIVE OF THE SURVEY:The objective of any survey is to study the opinion of the respondent about the chosen items. The opinions are drawn in the form of answer given to the set of question in the questionnaire. The topic of the present survey is THE STUDY ON ULIP AS AN INVESTMENT OPTIONS
SAMPLING DESIGN:1).Type of research-Descriptive and Conclusive. 2)-Data type Primary data and secondary data. 3)-Sampling size -50. 4) Data collection method Questionnaire (multiple choice, open-ended, dichotomous), interview and observation. 5)-Data collection instruments-structured questionnaire.
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ULIPS AS AN INVESTMENT OPTION 6)-Sample unit-Investors visiting at HDFC SLIC kormangala, Bangalore 7)-Sample technique Random. 8)-Sampling method-Non-probability sampling. 9)-Period of study-6 weeks. 10)-Data analysis Tools and techniques Bar and Pie Charts.
LIMITATIONS OF STUDY:
1. Lack of financial assistance caused the study to be limited over a confined area. 2. Lack of awareness among people about insurance as an investment product remained the cause for not getting proper responses from some of the people. 3. As the Unit Linked plans are market dependent and have certain amount of risk Associated with them, people do not easily trust them. 4. Aggressive sales strategy of Public insurance players may cause inconvenience to some people. Thus they do not furnish correct information in the Questionnaire filled by them. 5. The project was constrained by time limit of two months. 6. Mindset of people may vary depending upon their age, gender, income etc. 7. Getting appointment from the concern person was very difficult. 8. Respondents were very busy in their schedule. So it was very less time taken in every Questionnaire response by them.
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ULIPS AS AN INVESTMENT OPTION 9. The sample size is restricted within Bangalore. So we cannot generalize the result of the universe The information revealed by the respondents may be biased. 10 Some of the respondents were not willing to disclose certain facts. This may have affected the accuracy of the data.
CHAPTER-2 ANALYSIS AND INTERPRETATION 2.1 Age group of surveyed respondents

Table: 1 AGE GROUP 18-25 Years 26-35 Years 36-49 Years Above 50 years Total NO OF RESPONDENTS 26 12 8 4 50 PERCENTAGE 52% 24% 16% 8% 100%
INTERPRETATION:
ULIPS AS AN INVESTMENT OPTION From the chart above we find that 26 of the respondents fall in the age group of 18 25 years, 12 fall in the age group of 26 35 years, 8 fall in the age group of 36 49 years and 4 fall in age group of above 50 years. Therefore most of the respondents are relatively young (below 30 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns.
2.2 PROFILE OF RESPONDENT

TABEL: 2 PROFILE STUDENT HOUSE WIFE WORKING PROFESSIONAL BUSS/SELF-EMPLOYED GOVT.EMPLOYEE NO OF RESPONDENTS 11 7 15 7 10
INTERPRETATION:
Above chart shows that the 30% respondents are working professional can put their money as investment and tax savings, 14% are house wife will invest their money for the family responsibility, 22% students work as financial consultants and invest their funds for building there career, 20% are government employees who plan their investments as pension schemes and finally 14% are business and self employed who are in least who ultimately look for high returns.
2.3 AWARENESS ABOUT ULIPS IN THE MARKET

TABEL: 3 AWARENESS ABOUT ULIPS IN THE MARKET YES NO 40 10
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INTERPRETATION:
This graph shows that out of total 50 respondents only 40 or 80% respondents Know ULIPs. Rest all dont know about ULIPs so there is a very big scope for life insurance companies to cover these people. So in future business of life insurance will grow further.
2.4 PREMIUM INSURANCE

PREMIUM PAID (RS) Rs. 5000-Rs.15000 Rs.15001-Rs.50000 Rs.50001-Rs.80000 Rs.80001-Rs.100000 More than 100000
(P.A)
PAID
BY
INDIVIDUALS
FOR
LIFE
TABEL: 4 NO OF RESPONDENTS 25 13 4 6 2
INTERPRETATION:
From the chart above we find that, 50% of the respondents surveyed pay an Annual premium less than Rs. 15000 towards life insurance. 26% of them pay an annual premium less than Rs. 50000 and 8% pay less than Rs. 80000. Hence we can safely say
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ULIPS AS AN INVESTMENT OPTION that HDFC SLIC would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 per annum. Only 4% of the respondents pay more than Rs. 100000 as premium and most products sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share as more Individuals would be able to afford the policies/plans offered.
2.5 POPULAR LIFE INSURANCE PLANS

TABEL: 5 TYPE OF PLAN Life insurance Pension plans & child plans Tax savings plans Total NO OF RESPONDENTS 12 6 6 50
Life insurance & investment plan 26
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INTERPRETATION:
From the chart given above we can clearly see that 12 or 24% of the respondents hold life insurance plans and 26 or 52% of the respondents hold life insurance cum investments plans. If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus, 6 or 12% hold pensions plans so that they can led the life after retirement and finally 6 or 12% of respondents hold tax savings plans so that the ensure safety for their money.
2.6 CONSUMER WILLINGNESS TO SPEND ON PREMIUM

TABEL: 6 WILLINGNESS TO SPEND ON PREMIUM < Rs.6000 Rs.6001-Rs.10000 Rs.10001-Rs.25000 Rs.25001-Rs.50000 Rs.50000-Rs.100000 NO OF RESPONDENTS 10 16 12 6 6
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INTERPRETATION:
From the graph above, we can clearly see that 20% of the respondents would Be willing to spend < Rs. 6001 for life insurance. 32% would be willing to spend between Rs. 6001 Rs. 10000 per annum. Only 24% would be willing to spend Rs.10001- Rs. 25000 p.a premium. We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. HDFC SLIC is facing with a large amount of competition. There are 18 insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum
2.7 CHART SHOWING IDEAL POLICY TERM TABEL: 7

IDEAL POLICY TERM 3-5 YEARS 10-15 YEARS 16-20 YEARS 21-30 YEARS WHOLE LIFE POLICY NO OF RESPONDENTS 20 12 6 8 4
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INTERPRETATION:
From the chart given above it can be seen that 20 or 40% of the respondents prefer a policy term of 3 5 years, 12 or 24% prefer a term of 10 15 years and 6 or 12% prefer a term of 16 20 years. This means that HDFC SLIC could introduce more plans Where in the premium paying term is less than 15 years. The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.
2.8 FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE

TABEL: 8 NEW HORIZON COLLEGE OF ENGINEERING page 71
ULIPS AS AN INVESTMENT OPTION PARAMETER ADVERTISEMENTS HIGH RETURN ADVICE FROM FRIENDS FAMILY RESPONSIBILITY TOTAL NO OF RESPONDENTS 8 28 8 6 50
INTERPRETATION:
From the chart above it can be seen that 12% of the respondents purchase life insurance to secure their families, 56% take life insurance to get high returns,
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ULIPS AS AN INVESTMENT OPTION 16% purchase insurance on the advice of their friends and 16% purchase insurance because of the influence of advertisements. The main purpose of insurance is to cover the financial or economic loss. But now days this trend is changing. Along with protection (life cover), a savings With the introduction of the new unit linked plans in the market is playing major role.
2.9 PREFERRED COMPANY TO PURCHASE INSURANCE

TABEL: 9 TYPE OF COMPANY GOVT.OWNED PUBLIC LTD CO PRIVATE CO FOREIGN CO NO OF RESPONDENTS 16 10 16 8
INTERPRETATION:
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ULIPS AS AN INVESTMENT OPTION From the graph above we find that 32% of the respondents preferred to purchase insurance from a government owned company and private company, 20% of the respondents preferred to purchase insurance from a public limited company, and only 16% of the respondents preferred a foreign based company. Heavy advertising through television, newspapers, magazines and radio is required.
2.10 MINIMUM EXPECTED RETURN ON INVESTMENT

TABEL: 10 EXPECTED RETURN LESS THAN 5% 10%-20% 21%-30% 31%-40% MORE THAN 50% NO OF RESPONDENTS 4 24 12 6 4
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INTERPRETATION:
From the chart above it can clearly been seen that 8% of the respondents would like < 5% returns, 48% would like returns between 10 20% and 24% would like returns of 21 30% on their investments. Therefore the average return on investment should be at least 10 30 %. Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment in government securities and the debt market. But the returns on these instruments are low (8 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk Borne by the policy holder is also higher. Therefore a good combination of the two instruments is often a wise choice.
FINDINGS
1. There is a great future of the life insurance sector in India as 80% of the
Indian population is still without life cover and people are just now coming in response to the awareness campaigns being carried out by almost all the insurance companies. 2. We have found out that age plays a major role in deciding the investment patterns of people as generally the younger class of people tend to take more risk and invest in the older class of people.
3. Life insurance corporation (LIC) of India is still the undisputed market leader as
32% of the respondent surveyed owned a policy in it. 4. All the products of HDFC SLIC are really very good and have an edge over most of the products of other major life insurance companies as the plans offered by the company are very flexible.
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ULIPS AS AN INVESTMENT OPTION 5. ULIP has its own brand equity in the insurance sector because most of the people invest in Ulips for the tax and savings purpose. 6. Private companies have a great scope in insurance market cause majority of the people like their savings to invest in private sector and as in the survey nearly 40% have invested in private owned companies. 7. HDFC SLIC have about 15-20 ULIPS plans staring from children plan to retirement and pensions plans which has a wider scope for the investor to invest their money according to their needs.
RECOMMENDATIONS:
1. Bring out ULIPS policies with small premiums payable for short periods of time Rs. 5000 Rs. 10000 per annum for 10 years. 2. Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of ULIPS. 3. HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients.
4. HDFC Standard Life insurance should establish their Branches in Rural areas
where they can capture a good market.

5. The company faces a large amount of competition. To sustain itself it must
promote its products through advertising and improve its selling techniques. NEW HORIZON COLLEGE OF ENGINEERING page 76
ULIPS AS AN INVESTMENT OPTION Consumers must be aware of the new plans available at HDFC SLIC. The medium of advertising used could be television since it is the most effective tool to promote their products.
6. The edge of the ULIPs over the products like mutual funds and investment in
equities should be appropriately promoted and should be made known to the people.
7. Customer should be informed beforehand about the fluctuating returns from the
market. 8. HDFC SLIC should introduce other additional ULIP products which give high return, tax saving, accident benefits etc.
CONCULSIONS
1. There are still large number of people who do not invest their savings and keep them idle. 2. Around 80% of the people consider ULIPs as a good area for investing their funds. 3. Even being a late entrant in highly competitive insurance market HDFC SLIC is well aware among the customers. 4. Tax planning is the major objective for the purchase of ULIPs followed by Investment and Child education/pension plans. 5. In India people prefer to invest their funds for long terms especially for period above 5 years. 6. The survey has shown that customers are quite concerned about their funds and thus take financial consultants (F.C) advice before making investment.
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ULIPS AS AN INVESTMENT OPTION 7. Indian investors are conservative and invest in FDs and traditional plans. 8. There are majority of investors who are switching towards Mutual Funds and ULIPs. 9. Todays investor is educated and invests in ULIP after considering a number of factors like Funds objective, reputation of the fund, past returns etc. 10. Safety returns and tax saving ability of a ULIP influence the decision making ability of the customers.
CHAPTER-4 BIBILIOGRAPHY & REFERENCE

BOOKS REFERRED: 1. Kothari, C.R., Quantitative Techniques, 2nd edition, New Delhi, Vikas Publishing House Pvt. Ltd. 1984. 2. Saunders, Anthony & Cornett, Millon, Marcia, Financial Markets and Institutions-A Modern Perspective, 2nd edition (International edition), New York, Mc Graw Hill/Irwin an imprint of the Mc Graw Hill Companies, Inc., 2003 3. Khan, M.Y., Financial services, 3rd edition, New Delhi, TATA McGraw Hill Publishing Company Ltd., 2004. 4. Peraswamy, P., Principles and Practices of Insurance, 1st edition, Himalaya Publishing house 2003. 5. IC-33 life insurance.
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INTERNET SITES: 1. www.hdfcinsurance.com 2. www.icici.com 3. www.Bajajallianzlife.com 4. www.moneycontrol.com 5. www.indiacore.com 6. www.myiris.com 7. www.sbi-insurance.com 8. www.google.com 9. www.scribd.com 10. www.management pardise.com 11. www.IRDA.com
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ULIPS AS AN INVESTMENT OPTION

CHAPTER 1 INDUSTRY PROFILE Meaning Of Insurance:

NEW HORIZON COLLEGE OF ENGINEERING

Indian Insurance: Sector Reform

NEW HORIZON COLLEGE OF ENGINEERING

Current scenario of India Insurance Industry

NEW HORIZON COLLEGE OF ENGINEERING

ULIPS AS AN INVESTMENT OPTION

Insurance Regulatory and Development Authority (IRDA)

Review of the annual report of the IRDA

NEW HORIZON COLLEGE OF ENGINEERING

Insurance - Kind of Investment:

Insurance Regulatory & Development Authority:

Insurance Regulatory & Development Authority:

Powers and Functions of IRDA

NEW HORIZON COLLEGE OF ENGINEERING

NEW HORIZON COLLEGE OF ENGINEERING

Impact of IRDA on Indian Insurance Sector:

NEW HORIZON COLLEGE OF ENGINEERING

ULIPS AS AN INVESTMENT OPTION

NEW HORIZON COLLEGE OF ENGINEERING

ULIPS AS AN INVESTMENT OPTION

NATURE OF INVESTMENT / RISK AND RETURN CATEGORY: Equity funds:

Income, Fixed Interest and Bond Funds:

CHARGES OF HDFC STANDARD LIFE INSURANCE COMPANY:

CHARGES: PREMIUM ALLOCATION CHARGE:

NEW HORIZON COLLEGE OF ENGINEERING

3 rd Year onwards 99% 99% 99% 99% 99% 99%

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ULIPS AS AN INVESTMENT OPTION

Fund management charge (FMC):

NEW HORIZON COLLEGE OF ENGINEERING

Standard Life Group (Standard Life plc and its subsidiaries)

NEW HORIZON COLLEGE OF ENGINEERING

Vision, Mission & Values of HDFC Standard Life Insurance Ltd.

NEW HORIZON COLLEGE OF ENGINEERING

Values that we observe while we work:

Goals of the Company:

NEW HORIZON COLLEGE OF ENGINEERING

ULIPS AS AN INVESTMENT OPTION

ORGANISATION STRUCTURE POLICIES AND PRODUCTS:

NEW HORIZON COLLEGE OF ENGINEERING

Savings & Investment Plans:

NEW HORIZON COLLEGE OF ENGINEERING

ULIPS AS AN INVESTMENT OPTION HDFC SurgiCare Plan

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ULIPS AS AN INVESTMENT OPTION

Preferred and Trusted Brand:

Need Based Selling Approach:

Risk Control Framework

Focus on Long term Value

Diversified Product Portfolio

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2.7 Infrastructure facilities

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MCKENSYS 7 S FRAME WORK

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ULIPS AS AN INVESTMENT OPTION

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